The Financial Services Authority (FSA) has announced that it is to contest the British Bankers’ Association’s (BBA) calls for a judicial review of new payment protection insurance (PPI) complaints handling measures.

There is “insufficient legal clarity” about the FSA’s and FOS’s proposals in the area of PPI in its statement, said the BBA.

Firms will be expected to continue to handle complaints while this process is ongoing, in the interest of the consumer – those unhappy with how their complaint is handled may refer it to the Financial Ombudsman Service.

The FSA said more than a million complaints have been made to firms regarding the PPI in the last five years – in 2009/10, 49,196 complaints were referred to the Ombudsman, which upheld nine out of tem in the complainant’s favour.

Twenty-four firms have been subject to enforcement action for sales failings since the FSA took on regulation of PPI in 2005, and the FSA has carried out three thematic reviews, issued warnings and visited over 200 firms to improve the market.

The package of new complaint handling measures, said the FSA, as outlined in policy statement 10/12, is a ‘sensible and fair solution for customers and the industry alike’ – therefore the FSA will ‘vigorously contest the BBA’s judicial review’.

The BBA statement read: "The British Bankers' Association regrets that today it has had to file papers with the high court asking for some decisions made by the Financial Services Authority and the Financial Ombudsman Service to be judicially reviewed. This relates to the proposed new rules that are due to be implemented at the end of this year on handling payment protection insurance complaints.

"It has unfortunately been necessary to do this because there is insufficient legal clarity about what the FSA and FOS is proposing in this area. Everyone's actions must be assessed on the basis of a proper understanding of the relevant law and regulation and this procedure will bring this about.

"We will continue to explore all opportunities for dialogue with the FSA to resolve the industry’s concerns. No one wants to go to court but the law needs to be clear. We hope to get this resolved as quickly as possible."

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